Medicare Cuts: A Zero-Sum Game or Worse

While Congress debates the "doc fix," Medicare has reduced payment to physicians by 21.2 percent.

The Senate passed a bill that would provide a 6-month, 2.2-percent hike in payments instead. The House has not.

If the bill eventually passes, the cost of reprocessing claims is likely to wipe out the physicians'  2.2-percent increase. Medicare would also spend about 30 cents per claim on reprocessing.

The result? A loss of resources and goodwill. And a negative impact on patient care.

Physicians may be inclined to see fewer Medicare patients. Already more than 17 percent restrict the number of Medicare patients in their practice. The rate among primary care physicians is 31 percent. (Based on 9,000 physicians surveyed by the American Medical Association)

Physicians may also change how they treat patients. When Medicare payment rates were reduced for outpatient administration of chemotherapy drugs starting in 2005, physicians responded by switching chemotherapy agents. They were less likely to dispense the drugs with greater cuts in profitability and moved to higher-margin drugs instead, offsetting some of the savings intended by the legislation.

Congress can try to cut costs by reducing payments to physicians. But, in the end, it's likely to be a losing proposition. Real health care reform will come when government chooses to put its trust in physicians, instead of putting its hands in their pockets.

UPDATE: Temporary sanity prevails. From modernhealthcare.com, Friday, June 25:

"... the House passed on a 415-to-1 vote legislation that replaces a 21.2% Medicare physician pay cut with a 2.2% raise through November. The White House announced Friday that President Barack Obama has signed the bill into law."

Another temporary fix. The sad saga continues...



— Tom DeSanto

Sources: Health Affairs, June 17; USA Today; Image: Google Images